Word Count : 295

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In a perfectly competitive market, efficiency is achieved when resources are allocated in a way that maximizes total surplus, i.e., the sum of consumer and producer surplus. However, several distortions can prevent this efficiency from being realized. One major distortion is the presence of externalities. When external costs (negative ______ ____ ____ _________ ________ _______ ______ __________ ____ _________ __________.
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